President Bush today signed the largest financial bailout bill in the history of the world. The financial bailout bill represents over $700 billion dollars that the US Treasury will have at its desposal to purchase bad debt from financial institutions with the goal of easing the ever tightening credit crunch that is currently spreading throught the world.

Yesterday, without much fanfare, the largest bank failure took place in the history of the world. Washington Mutual failed yesterday and was taken over by Federal regulators. Within the same day, the Federal regulators sold the assets to JP Morgan for $1.9 billion. The Mercury News reports:

The Federal Deposit Insurance Company (FDIC), insures Americans’ bank deposits of up to $100,000. But it says because of the deal it will not have to use its assets to cover Washington Mutual’s deposits.

So here is my question to Congress and the President – If we are on impending gloom and doom and will experience massive bank failures, how come the Washington Mutual failue was resolved with the kind of outcome that is Main Street friendly without spending $1 of taxpayer money?

In one day, the existing Federal authorities and the market resolved the largest S&L collapse with a result that seems to be exactly what is good for all of us taxpayers. That said, there were winners and loosers:

Winners:

The depositors. Their money is safe and covered by JP Morgan.

The FDIC. No funds will be needed to cover deposits.

The taxpayer. No taxpayer will have to assume the losses of this failure.

Losers:

The Washington Mutual Executives. Presumably, JP Morgan will no longer need their services.

The Washington Mutual Shareholders. Shareholder took a risk in this company and lost.

Isn’t this the kind of result that Congress and the Administration is trying to get to? So help me understand this — why do we need to spend $700 billion to fix this problem? – Glenn

I don’t want to take valuable real estate which would result in visitors possibly missing Glenn’s excellent posts — you’ve got to hear Letterman! But I just can’t let a day pass without commenting on John McCain’s bizarre stunt, and it must be seen for what it is. If he had a true interest in the economy — what amounts to Foreign Relations for him — he would have been involved in the policy discussions from the start. By every account and every person I’ve talked to in the Senate — where I used to work — he has had zero involvement. So then he decides to suspend his campaign, but he didn’t tell his running mate that, who was out negatively attacking Obama yesterday. So what gives? I think the best answer to that question comes from Congressman Barney Frank (D-MA), when he said, “all of a sudden, now that we are on the verge of making a deal, John McCain drops himself in to help us make a deal. We are trying to rescue the economy, not the McCain campaign.” What he’s really trying to do is pull a political stunt while seeming to take the high moral ground and buy more time to figure out just exactly how that economy thing works. But pulling stunts and negatively attacking your opponent may make good debate tactics, but it’s no way to get us out of this mess. — Jeff